Ele entra em um kill-ring, assim como no Emacs. Da documentação do GNU Readline:
When you use a kill command, the text is saved in a kill-ring. Any number of consecutive kills save all of the killed text together, so that when you yank it back, you get it all. The kill ring is not line specific; the text that you killed on a previously typed line is available to be yanked back later, when you are typing another line.
Fonte: link
O kill ring é armazenado na memória alocada via malloc
para um ponteiro de char. De kill.c
da fonte readline:
/* Where to store killed text. */
static char **rl_kill_ring = (char **)NULL;